The Road to Black: Just say no to credit cards

Credit cards are ubiquitous in America. Buying things with other people's money is a societal norm, and achieving a high "credit score" literally requires one to have a lot of debt.

But it is my contention that credit cards should always be avoided. Here are a few reasons:

1. Universal default

With a few exceptions, the credit card contracts offered by banks have a provision called universal default. The bank monitors your credit history, and if you fail to pay (default) on any loan, your rate is raised to the default rate (the highest possible) — even if you never paid late on the credit card in question.

2. Increased spending

According to Dave Ramsey, when you make a purchase with a credit card, you spend 12-18% more than you would have if you had used cash. Swiping a credit card is painless; there is no sense of money actually leaving you. And with small purchases, there may be internal pressure to spend more "to make it worth it," since it seems silly to run a credit card for only a dollar or two. There is often external pressure as well: many businesses have a minimum purchase for credit cards, which offsets the fee that banks charge merchants to accept credit card payments.

3. Lack of privacy

Your credit card statement records where and how much you spend. Think nobody's paying attention? CompuCredit, which issues a subprime Visa card, makes decisions about its customers' credit-worthiness based on where they use their card, according to Businessweek. Their attorney says, "These scoring models are commonplace across the industry."

What do you think?

Do you think credit cards should always be avoided? Or is it OK — even wise — to use them in some cases? Leave a comment with the pros and/or cons of credit cards.